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July 21 — The Federal Communications Commission's proposed $100 million fine against AT&T Inc. is prime evidence, broadband providers say, that the agency greatly underestimated their costs for complying with transparency requirements of net neutrality rules.

Broadband providers of all sizes also told the FCC in comments filed with the agency that its compliance estimates don't account for business or technological realities. The prospect of multimillion dollar fines for even unintentional violations will force Internet service providers to spend well more than the FCC's estimated additional 4.5 hours and $200.75 per provider in annual costs, the providers said in their filings.

“This number significantly understates the amount of time that [Broadband Internet Access Service] providers expect to spend to effectively and accurately collect and disclose additional information about network practices,” the American Cable Association (ACA) said in its July 20 filing.

Excessive Compliance Burdens Claimed

WISPA, the Wireless Internet Service Providers Association, told the FCC that contrary to the agency's estimate that small businesses would have a lesser compliance burden than larger ISPs, small providers could “face burdens and costs that would far exceed the average,” according to a July 20 filing.

All but one or two of WISPA's 850 members serve fewer than 100,000 broadband customers and “exist on a shoestring budget and dedicate scarce resources to building and expanding broadband networks to unserved and underserved areas where demand is greatest,” the group said. The FCC's rules will require WISPA members to instead direct their funds to either more staff and expensive lawyers, or live with the heightened risk of FCC enforcement action, the group said.

“In light of the Commission's recent decision to impose a $100 million forfeiture against AT&T Mobility for alleged defects in its open Internet disclosure statement, it is clear that the potential for severe sanctions requires extreme diligence and expertise to appreciate the full impact of the disclosure rules,” WISPA said.

At issue is the enhanced transparency disclosures included as part of the FCC's Open Internet order, which require ISPs to publicly disclose information on network management practices, commercial terms, network performance characteristics, and other measures.

The FCC's reporting requirements must be approved by the Office of Management and Budget as complying with the Paperwork Reduction Act (PRA) of 1995. Among other things, the law requires federal agencies to minimize reporting burdens “to the extent practicable” and demonstrate that reporting requirements are unambiguous.

Multiple commenters said the FCC failed to meet the PRA standards. But they differed on what the agency should do to address industry groups' concerns.

CTIA—The Wireless Association asked the FCC to start over by issuing a new PRA Notice with more accurate cost and burden estimates, “and begin the PRA review process again,” according to its July 20 filing .

“The existing transparency rule is already extremely burdensome, well beyond the 24.4 burden hours previously approved by OMB,” CTIA said. “Given the magnitude of the risks facing broadband providers, it is absurd for the Commission to suggest that these providers will spend only an additional $200.75 or 4.5 hours per year to ensure compliance with the ‘enhanced' transparency requirements,” it said.

The U.S. Telecom Association asked the commission to “modify both the burden estimates and the scope of the information collection to better reflect the PRA’s goals and requirements,” according to its July 20 filing.

Smaller ISPs Seek Extension

Trade associations representing smaller ISPs, including ACA and WISPA, asked for the FCC to modify its rules. The ACA asked the FCC to continue the exemption from the transparency rule reporting requirements related to direct customer notification for businesses with fewer than 100,000 broadband customers, according to its July 20 filing.

The group said it doesn't oppose direct notification practices for companies with more than 100,000 but fewer than 400,000 customers.

The ACA also asked the FCC to amend the network practice reporting requirement “to require that providers only disclose the trigger that will activate use of the practice for a particular type of traffic—and not the information about the purpose of the practice and the effect on a user’s experience.”

Similar to the larger telecom groups, the ACA and WISPA said their members would have to engage outside counsel “out of an abundance of caution,” because of worries that even unintentional rules violations could lead to FCC Enforcement Bureau action.

The Enforcement Bureau levied a proposed fine of $100,000 against AT&T on June 17 for allegedly violating the 2010 Open Internet order's transparency rule.

All four trade associations are among the parties engaged in a lawsuit U.S. Telecom Ass'n v. FCC, D.C. Cir., 15-1063, 6/11/15against the FCC over its decision to reclassify broadband Internet providers under Title II of the Communications Act of 1934. The arguments the groups made in their comments on increased compliance costs and burdens could find their way into opening briefs due on July 30.

To contact the reporter on this story: Lydia Beyoud in Washington at lbeyoud@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com

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